Ether (ETH) surged to test the $1,950 level on Tuesday for the first time in seven weeks, catching leveraged short sellers off guard and triggering $62 million in liquidations across bearish positions. The move extended ETH’s recovery to 29% from its June 26 low of $1,500, running alongside Bitcoin’s (BTC) push above $66,500 as a broader risk-on mood swept crypto markets.
Rally Context: Stocks Provide the Tailwind
ETH’s climb closely tracked overall crypto market momentum, which turned positive in July. Gains in US equities on Tuesday eased investor concern about stretched valuations following the artificial intelligence stock rally, with traders expecting solid corporate earnings after 3M Company (MMM US) reported results Tuesday morning. The next major test arrives Wednesday, when Alphabet, Google’s parent company, reports quarterly results after US markets close. Investors are watching for 64% growth in cloud services revenue driven by heavy AI spending. Strong guidance could push total crypto market capitalisation past the $2 trillion mark.
Onchain Metrics Flash Warning Signs
Despite the price recovery, Ethereum’s network activity has not kept pace. Demand for block space remains well below levels seen six months ago, partly because trader interest in memecoins and utility tokens has faded. Several leading Ethereum ecosystem projects are down 50% or more year-to-date, including Ethena (ENA), Mantle (MNT), and Arbitrum (ARB).
Weekly revenue generated by Ethereum decentralised applications (DApps) dropped to $9.8 million, the weakest reading since September 2024. Among the few bright spots, Sky (formerly MakerDAO) contributed $3.2 million in weekly revenue, and Chainlink added $1.2 million. Overall decentralised exchange (DEX) volumes fell to $7.2 billion per week.
Derivatives Markets Remain Subdued
The annualized funding rate on ETH perpetual futures has struggled to hold within the neutral 6% to 12% range over the past month. Sentiment has improved from the negative funding rates recorded in late June, when bearish positioning was dominant, but conviction among bulls remains thin. ETH currently trades 61% below its all-time high set in August 2025, which analysts say explains the lack of enthusiasm in derivatives positioning.
Record Staking Offers a Structural Floor
One factor working in ETH’s favour is record staking participation. According to Staking Rewards data, 34% of all ETH supply is now staked, up from 33% one month earlier. Analysts argue this reduces available selling pressure as long-term holders continue to accumulate. Tom Lee’s Bitmine Immersion (BMNR US) added 156,719 ETH over the past month alone and now controls 4.8% of available supply, signalling growing institutional commitment to the staking model.
With onchain demand still soft and derivatives conviction thin, Ether’s path to $2,100 likely depends on reduced risk aversion across markets, making Alphabet’s Wednesday revenue guidance especially important.
